A Who’s the Christmas Grinch, Scrooge?

Two unpopular characters associated with Christmas, the Grinch and Scrooge, came to mind after celebrating this otherwise joyous occasion just two days ago. A day after Christmas, there was an announcement four more new tax bills will be greeting us in the year 2020. That’s just four days from today.

This is why the Christmas Grinch and Scrooge popped up. 

According to the classic book, “How the Grinch Stole Christmas,” by Dr. Seuss, the pen name of Theodor Geisel, a grumpy Grinch plots to ruin Christmas for the village of Whoville. From his cave, the Grinch can hear the noisy Christmas festivities that take place in Whoville. Continuously annoyed, he devises a wicked scheme to steal their presents, trees, and food for their Christmas feast.

On the other hand, another mean-spirited, miserly old man named Ebenezer Scrooge spends his Christmas eve like most of his nights ... alone. But on Christmas eve, Scrooge was visited by four ghosts one-by-one at his house. The first three ghosts are the spirits of Christmas Past, Present and Yet to Come. The last ghost was his friend Jacob Marley who warned Scrooge about the need to change his focus in life from money to “mankind.”

Admittedly, the two Christmas characters have nothing to do with government taxes. But for lack of better allegory, Grinch and Scrooge will suffice for now about the new tax bills looming after the Christmas holidays are over.

Unfortunately, the bearer of bad news, Albay Rep. Joey Salceda, chairs the House of Representatives ways and means committee. His Senate counter is Sen. Pia Cayetano, elder sister of Speaker Alan Peter Cayetano.

Actually, the four new tax bills are on top of three other tax bills stalled at the legislative mills in the 18th Congress. specifically at the Senate. The four new tax measures are as follow: the five-percent license fee on Philippine offshore gaming operators (POGOs); the doubling of the road user tax; a new mining industry fiscal regime; and a tax on single-use plastics.

Of the four, the almost 100-percent increase in road user tax, officially called motor vehicle user’s charge (MVUC) under the present law, would bring in the biggest revenue increment of P236 billion, based on Salceda’s estimates for the period 2021 to 2025.

The Land Transportation Office collects the MVUC from 11 million Filipinos who own motor vehicles in the form of increased annual registration fees. Salceda projects that the POGO tax would yield P213 billion over five years.

Meanwhile, the three tax bills much earlier approved by the Lower House but are stalled at the Senate for various reasons, are namely, Corporate Income Tax and Incentives Reform Act (CITIRA); the Passive Income and Financial Intermediaries Tax (PIFITA); and, the Real Property Valuation and Assessment Reform Act.

All of these pending tax bills are part of the Comprehensive Tax Reform Program (CTRP) that the Department of Finance (DOF) has been shepherding from day one of the administration of President Rodrigo Duterte.

“Of course, the most important priority next year will be to pass the proposed CITIRA. This is the single most important economic reform measure after EDSA. I expect the Senate to pass CITIRA within the first two months of 2020,” Salceda cited.

Under CITIRA, corporate income tax would be reduced from 30 percent to 20 percent over 10 years, while tax holidays and discounts many businesses have been enjoying for more than 30 years would be withdrawn. Tax incentives would be time-bound and performance-based.

The proposed law envisions to level the playing field among big businesses whose tax privileges would be scrapped in favor of small and medium enterprises, in the sense that they would be subject to the same income tax rates.

“As chair of the committee on ways and means, I have three goals that we need to achieve by 2022: A-level credit rating, eight percent economic growth, widespread prosperity. We will work tirelessly to achieve these,” Salceda vows. Is he still high after the former Davao City Mayor identified him last month as one of the potential “presidential” timbers from Bicol in the May 2022 elections?

But to his credit, Salceda was able to push the passage into law of the biggest and most comprehensive CTRP component, the Tax Reform Acceleration and Inclusion (TRAIN) that President Duterte signed into law in December 2017. It was the 17th Congress that approved the TRAIN Law that supposedly sought to reduce personal income tax (PIT), estate tax and donor’s tax, it, however, raised value added tax (VAT), documentary stamp tax (DST) and the excise tax on tobacco products, petroleum products, mineral products, automobiles, sweetened beverages, and cosmetic procedures.

Since the TRAIN Law took effect on Jan. 1,2018, the withholding tax deducted from monthly paychecks for most of us reclassified under new tax brackets got bigger. Incidentally, the next round of increases in the excise tax of gasoline, diesel and other refined petroleum products by virtue of the TRAIN Law would take effect by Jan. 1,2020.

Before we forget, the Senate and the House ratified last week the Sin Tax bill, which imposes higher taxes on alcohol, e-cigarettes/vapes and heated tobacco products (HTPs) to help finance the implementation of the Universal Health Care (UHC) law. The ratification of the revenue measure came on the eve of Congress’ adjournment for their month-long Christmas break.

This is projected to raise P24.9 billion in fresh revenues. Lawmakers allegedly “inserted” a rider provision exempting some medicines from VAT, including those for diabetes, cholesterol and hypertension, for the first year. But weren’t the same medicines already VAT-exempt under the TRAIN Law? Obviously, it is a lame attempt to sell to the public this soon-to-become new tax law.

President Duterte is expected to sign the bill into law before the end of the year to make the tax increases effective on Jan. 1. Guess who is the Grinch or Scrooge? Your guess is as good as mine, with an emoticon of a wink.